Xylem Inc. · NYSE:XYL
Xylem — Investor Day (May 2024)
101 slides from Xylem's investor day presentation, May 30, 2024
Slide 1: Investor Day
xylem Investor Day May 30, 2024
Slide 2: Welcome to Reservoir Center for Water Solutions
Welcome to Reservoir Center for Water Solutions Reservoir Mission 50+ Affiliate Partners Including To advance the shared interests of the water sector through collaboration and constructive dialogue to make progress towards overcoming global water challenges Convene Create a shared space for collabo
Slide 3: Our Agenda
Our Agenda 11:00 Company Overview and Strategic Update Driving Profitable Growth Segment Presentations – MCS and WI Break 12:00 Segment Presentations – AW and WSS Financial Update Break 1:00 Q&A and Closing Remarks 1:30 Lunch and Product Demonstrations 3 Investor Day 2024
Slide 4: Forward-Looking Statements
Forward-Looking Statements This presentation contains “forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Generally, the words “anticipate,” “estimate,” “expect,” “project,” “int
Slide 5: Key Notes for Today’s Presentation
Key Notes for Today’s Presentation • All references to financial performance metrics are on a non-GAAP basis. See appendix for non- GAAP definitions and reconciliations to GAAP results • All 2024 references represent our 2024 full-year guidance • All 2027 references represent our longer-term targets
Slide 6: Company Overview and Strategic Update
Overview 1 Company Overview and Strategic Update 2 Driving Profitable Growth 3 Segment Presentations 4 Financial Update Matthew Pine 5 Q&A and Closing Remarks President and Chief Executive Officer 6 Lunch and Product Demonstrations 6 Investor Day 2024
Slide 7: Key Messages
Key Messages Platform, culture and team to empower transition to a water-secure world Drive resilient above-market growth, accelerated by Evoqua synergies Committed to accelerate margin expansion through simplification Compound earnings with disciplined capital allocation Uniquely positioned to driv
Slide 8: Solving Water Challenges Has Never Been More Urgent
Solving Water Challenges Has Never Been More Urgent Intensifying Megatrends Scarcity Resilience Quality Compounded by Constraints Management Capacity Our Purpose To empower our customers and Affordability communities to build a more water-secure world 8 Investor Day 2024
Slide 9: Accelerating Our Purpose With an Intentional Culture Shift
Accelerating Our Purpose With an Intentional Culture Shift High-Impact Culture Inspired to Empowered Accountable Innovate to Lead to Deliver Driving a high-impact culture to deliver performance with purpose 9 Investor Day 2024
Slide 10: Experienced Global Leadership Team
Experienced Global Leadership Team Presenters Additional Senior Leaders Present Today Matthew Pine Rodney Aulick Franz Cerwinka Snehal Desai Dorothy Capers Al Cho Shuping Lu President and CEO President, President, Applied Chief Growth and General Counsel Chief Strategy and President, Joined: 2020 Wa
Slide 11: Executing With Momentum on Our Industry-Leading Platform
Executing With Momentum on Our Industry-Leading Platform Historical Revenue and Adj. EBITDA* Margin ~20% 18.7% 17.1% 17.1% Revenue CAGR 2024 and Beyond: (2012-2023) • Exceed 2021 investor day metrics ~8.5 3.6% • Outperform market growth organic* • Accelerate margin expansion 4.7 5.2 3.8 6.2% • Retur
Slide 12: Platform Uniquely Positioned for Value Creation
Platform Uniquely Positioned for Value Creation Significant Total Adj. EBITDA* ~$8.5B Revenue1 ~20% Margin1 ~$35B Market Cap2 6.7x Shareholder Return2 Since 2012 vs. 4.2x for S&P 500 Diversified and Resilient Revenue Mix3 in Attractive End Markets Our Impact ~5% #2 America’s ~10% ~20% Most Responsib
Slide 13: Doubling Down on Shareholder Value Creation
Doubling Down on Shareholder Value Creation Drive Resilient Accelerate Deploy Above-Market Growth Margin Expansion Capital Efficiently • Evoqua revenue synergies • Simplification • Organic core investments • Innovative solutions and • Strategic pricing • Consistent M&A compounder services • Operatio
Slide 14: Driving Resilient Above-Market Growth
Driving Resilient Above-Market Growth Xylem Evoqua Xylem Growth Simplification Markets Synergies Enablers + + + ~ 3% ~ 1% ~ 2% ~ (1)% Growth Revenue Synergies Above-Market Growth Impact In service of longer-term profitable growth Strategically positioned for profitable growth of 4 – 6% 14 Investor D
Slide 15: Simplification Is a Key Lever for Profitable Growth
Simplification Is a Key Lever for Profitable Growth Customers Colleagues Communities Investors • Make it easier to do • Focus on fewer, • Align with commercial • Accelerate margin business with Xylem bigger priorities strategy for scaled expansion impact • Unlock the potential • Integrate • Reinvest
Slide 16: Compound Earnings with Disciplined Capital Allocation
Compound Earnings with Disciplined Capital Allocation Capital Allocation Framework Strong Financial Position Organic Investments Support our core business ~$5B Incremental Capacity Inorganic Investments ~$10B Consistent M&A to drive shareholder value of capital deployment ~$3B capacity Dividends FCF
Slide 17: Significant Opportunity to Expand Our Addressable Market
Significant Opportunity to Expand Our Addressable Market Xylem Served Addressable Market (SAM) Priority High-Growth Areas Intelligent Solutions ~ $25B ~ $105B Leverage data to improve water Future Priority High- Opportunity infrastructure and systems Growth Areas Services ~ $80B Outsourced water man
Slide 18: Raising the Sustainability Aspirations of Our Combined Company
Raising the Sustainability Aspirations of Our Combined Company Decarbonize the Accelerate Water Advance Water Water Sector Stewardship Security for All Lead by example and enable utility Reduce global water demand Provide critical water, sanitation commitments to reach Net Zero across our own value
Slide 19: Confident in Significant Shareholder Value Creation
Confident in Significant Shareholder Value Creation 2021-20251 2024-2027 On track to achieve key New financial framework 20211 Investor Day milestones Organic* Revenue Growth 4 – 6% 4 – 6% Avg. Annual Adj. EBITDA* Margin 50 – 75 bps ~100 bps Expansion Well-positioned Adj. EPS* Growth N/A ~Mid-teens
Slide 20: Key Messages
Key Messages Platform, culture and team to empower transition to a water-secure world Drive economic Drive resilient above-market growth, accelerated by Evoqua synergies value creation, while enhancing Committed to accelerate margin expansion sustainability through simplification leadership Compound
Slide 21: Driving Profitable Growth
Driving Profitable Growth 1 Company Overview and Strategic Update 2 Driving Profitable Growth 3 Segment Presentations 4 Financial Update Snehal Desai 5 Q&A and Closing Remarks Chief Growth and Innovation Officer 6 Lunch and Product Demonstrations 21 Investor Day 2024
Slide 22: Key Messages
Key Messages Capitalize on market trends to outpace water sector growth Accelerate growth through revenue synergies with expanded portfolio Resilient growth with innovative customer-centric solutions and services Maximize shareholder value with strategic pricing and disciplined execution Focused on
Slide 23: Water Challenges Are Driving Water Sector Growth
Water Challenges Are Driving Water Sector Growth Intensifying Megatrends Served Addressable Market Scarcity Affected populations to double by 2050 Xylem Share Resilience MCS ~10% Water risk could wipe $5.6T from global GDP ~$15B 2024 by 2050 Quality 300-400M tons/yr of industrial waste into waterway
Slide 24: Best Positioned To Enable Transition To Water Security
Best Positioned To Enable Transition To Water Security… Differentiated Unmatched Leading Sustainability Portfolio Presence Expertise Leadership Leading Position 40M+ AMI Endpoints ~ 3,500 AQUA pro >4M Metric Tons Across most end-markets Deployed or under contract Service professionals CO2e reduction
Slide 25: Driving Resilient Above-Market Growth
Driving Resilient Above-Market Growth Evoqua Synergies Innovative Solutions Strategic Pricing Simplification and Services • High-growth • Customer-centric • Differentiated value- • Differentiated industrials organic innovation based pricing customer + + + • Utility penetration • Acceleration through
Slide 26: Accelerate Growth Synergies With Combined Portfolio
Accelerate Growth Synergies With Combined Portfolio Scale Deepen Expand Industrial Offering Utility Penetration Services Globally High-growth verticals Advanced treatment technologies Scaling beyond N. America Example Synergy Wins $6M ~ Cooling for data center Bypass + odor control for Treatment for
Slide 27: Innovation Framework to Deliver Evolution, Disruption and Penetration
Innovation Framework to Deliver Evolution, Disruption and Penetration Organic Innovation Partnerships Innovation labs Addressing evolving customer needs Fast-tracking scale for disruptive technologies with breakthrough technology Innovative Making it easier for our customers to deploy our solutions
Slide 28: Organic Innovation Targeted at Highest-Growth Applications
Organic Innovation Targeted at Highest-Growth Applications Xylem R&D Spend1 ~4% of Sales Priority High-Growth Areas for Investment Intelligent Solutions Leverage data to improve water infrastructure and systems WI ~20% Services Outsourced water management to MCS FY2023 By WSS drive uptime and reliab
Slide 29: Idrica Partnership Upgrades Intelligent Systems for Utilities
Idrica Partnership Upgrades Intelligent Systems for Utilities Exclusive Commercial Distribution Rights with Minority Stake for Interoperable Utility Operating System Market1 Customer Need Innovative Solutions ~$1.3B • Reduce complexity • Interoperable platform for Served Addressable Market • Optimiz
Slide 30: Well-Positioned To Address PFAS Regulation
Well-Positioned To Address PFAS Regulation U.S. EPA Established PFAS Drinking Water Maximum Contaminant Level Regulation in April 2024 Market Customer Need Innovative Solutions ~6,000 • Separate PFAS from • Broadest PFAS treatment portfolio Utilities needing treatment1 drinking water • Disciplined p
Slide 31: Delivering Over 1% Incremental Growth From Strategic Pricing
Delivering Over 1% Incremental Growth From Strategic Pricing Annual Revenue Growth From Price Our Strategic Pricing Approach Value-based pricing differentiation informed by 80/20 Monetizing our installed base through >100 bps high-margin service and aftermarket Disciplined transactional process ~40
Slide 32: Simplification Enables Long-Term Profitable Growth
Simplification Enables Long-Term Profitable Growth Differentiated Improved lead times from Increased speed of innovation customer engagement optimized product portfolio and go-to-market solutions and scalability Execution of transformative actions to reduce complexity 32 Investor Day 2024
Slide 33: Key Messages
Key Messages Capitalize on market trends to outpace water sector growth MSD Accelerate growth through revenue synergies with expanded portfolio Organic* Revenue Resilient growth with innovative customer-centric solutions and services CAGR 2024-2027 Maximize shareholder value with strategic pricing a
Slide 34: Measurement and Control Solutions
Measurement and Control Solutions 1 Company Overview and Strategic Update 2 Driving Profitable Growth 3 Segment Presentations 4 Financial Update Mike McGann 5 Q&A and Closing Remarks President, Measurement and Control Solutions and Americas Commercial Team 6 Lunch and Product Demonstrations 34 Inves
Slide 35: Key Messages
Key Messages Intelligent solutions to address our customers’ greatest resource challenges Transforming customers’ operations with sensing, communications, and an integrated platform to drive growth Differentiated technology providing the foundation for the digital utility Margin expansion from simpl
Slide 36: Measurement and Control Solutions Snapshot
Measurement and Control Solutions Snapshot 2023 Segment Financial Profile1 $1.6B Revenue 17.4% Adj. EBITDA* Margin $2.2B Backlog 2 2023 Pro Forma Revenue Mix ~5% ~15% ~25% ~15% Solution Region End Market ~15% ~65% ~75% ~85% Smart Metering Analytics US Emerging Markets Utilities Industrial W Europe R
Slide 37: Measurement and Control Solutions Overview
Measurement and Control Solutions Overview Smart Metering Analytics Integrated smart meters, FlexNet proprietary Comprehensive water quality monitoring communication infrastructure, and software solutions for lab and field environments Leak detection Optimized Quality Two-way Real-time Process and p
Slide 38: Measurement and Control Solutions Served Addressable Market
Measurement and Control Solutions Served Addressable Market Served Addressable Market Market Drivers How We Win • Water scarcity and quality • Leading AMI solution for large and medium US water utilities • Infrastructure resilience ~$15B • Comprehensive measurement • Changing utility workforce and s
Slide 39: Strong Foundation Positions Us to Drive Above-Market Growth
Strong Foundation Positions Us to Drive Above-Market Growth Leading AMI Technology Interoperable Platform High-Value Analytics • Deliver lower cost of ownership with • Accelerate utilities' digital adoption • Expand leadership in environmental dedicated utility-grade network by simplifying data acce
Slide 40: Highly Differentiated in the Attractive AMI Market
Highly Differentiated in the Attractive AMI Market US Water Utility Market Why Xylem Wins vs Cellular Share of Total Endpoints Large and Medium Utilities 30% 15-year Large Lower Annual Full Warranty ~400 utilities • Leading position Operating Cost Battery Life ~40% • Room to grow, ~45% adoption • St
Slide 41: Case Study: Partnering With Southeastern U.S. Water Utility
Case Study: Partnering With Southeastern U.S. Water Utility Customer Challenge Integrated Xylem Solutions 85% Reduction of breaks Population growth straining existing Improved data analytics helps in affected areas infrastructure predict operating needs AMI technology collects data on Optimizing exi
Slide 42: Meeting Customers Where They Are on Their Digital Journey
Meeting Customers Where They Are on Their Digital Journey Multiple Entry Points for Customers Manage Data • Provide Insights with Decision • Create Actionability Intelligence Valuable recurring Communicate • Transmit Data customer relationship Data • Enable Access Leverage installed base for afterma
Slide 43: Disciplined Approach to Drive Margin Expansion
Disciplined Approach to Drive Margin Expansion Simplification Strategic Pricing Operational Productivity • Smart metering 80/20 • Value-based pricing • Accelerate value engineering (5x increase in project funnel) • Software modernization • Large AMI project pricing discipline • Optimize manufacturin
Slide 44: 80/20 Opportunities to Reduce Complexity, Increase Productivity
Products A B Customers 1 2 80/20 Opportunities to Reduce Complexity, Increase Productivity A 3 4 B Smart Metering of revenue driven by top N. America (~10% of XYL revenue) ~50% 10 customers and partners ~80% of6%revenue driven by of products Pricing Product Customer and Strategy Simplification Growt
Slide 45: Key Messages
Key Messages Intelligent solutions to address our customers’ greatest resource challenges HSD Transforming customers’ operations with sensing, communications, and an integrated platform to drive growth Organic* Revenue Differentiated technology providing the foundation for the digital utility CAGR 2
Slide 46: Water Infrastructure
Water Infrastructure 1 Company Overview and Strategic Update 2 Driving Profitable Growth 3 Segment Presentations 4 Financial Update Hayati Yarkadas 5 Q&A and Closing Remarks President, Water Infrastructure and Europe Commercial Team 6 Lunch and Product Demonstrations 46 Investor Day 2024
Slide 47: Key Messages
Key Messages Mission-critical solutions in most resilient part of water cycle Strong demand accelerated by scarcity, quality and aging infrastructure Above-market growth from unmatched installed base, innovation and synergies Margin expansion through portfolio simplification and strategic pricing 47
Slide 48: Water Infrastructure Snapshot
Water Infrastructure Snapshot 2023 Segment Financial Profile1 $2.2B Revenue 19.2% Adj. EBITDA* Margin 2023 Pro Forma Revenue Mix ~10% ~35% ~35% ~20% ~40% Solution Region End Market ~60% ~65% 35% Transport Treatment US Emerging Markets Utilities Industrial W Europe Rest of the World 48 Investor Day 2
Slide 49: Water Infrastructure Overview
Water Infrastructure Overview Transport Treatment Products and engineered-to-order solutions Pumps for water intake and to move water and covering full water and wastewater treatment wastewater throughout the cycle; proxy for opex cycle for utility and industrial customers, now with strong replaceme
Slide 50: Mission-Critical Applications Spanning the Entire Water Cycle
Mission-Critical Applications Spanning the Entire Water Cycle Illustrative Example of Wastewater Utility 2 Clarification Clarifiers 3 Secondary Biological Treatment Sludge Collectors Diffused Aeration and Blowers Start here Digitally-Enabled Services Mixers Mechanical Aeration 1 Intake Pumping Scree
Slide 51: Water Infrastructure Served Addressable Market
Water Infrastructure Served Addressable Market Served Addressable Market (SAM) Market Drivers How We Win • Water scarcity • Leader in wastewater pumps, strong brand equity • Water quality ~$25B • Unparalleled, global installed • Infrastructure spend, affordability base: 2M+ assets • Tightening regul
Slide 52: Case Study: Concertor Smart Pumping at Heathrow Airport
Case Study: Concertor Smart Pumping at Heathrow Airport Customer Challenge Integrated Xylem Solutions 88% Non-biological solids from aircraft Concertor intelligent solution with Reduction in cleaning and toilet waste built-in sump and pipe cleaning servicing costs Clogging and blockages drive signif
Slide 53: Unique Capabilities Position Us to Drive Above-Market Growth
Unique Capabilities Position Us to Drive Above-Market Growth Accelerate Win With Innovation Leverage and Expand Revenue Synergies Installed Base • Comprehensive portfolio: ~90% of • Maintain leading customer value • Sticky replacement revenue from treatment train through fast and scaled innovation m
Slide 54: Case Study: European Water Utility
Case Study: European Water Utility Customer Challenge Integrated Xylem Solutions Pilot advanced wastewater treatment Unique rental solution for ~$4M for water reuse water recycling Synergy opportunity Combining Xylem’s oxidation Recharging local river with recycled water to build resilience and filt
Slide 55: Disciplined Approach to Margin Expansion
Disciplined Approach to Margin Expansion Simplification Strategic Pricing Operational Productivity • Transport business • Differentiated solutions • WI cost synergies ahead of launched 80/20 in April including digital, services schedule • Significant opportunity to • Longer-term opportunity from • C
Slide 56: Kicked off 80/20 for Global Transport Business
Products A B Customers 1 2 Kicked off 80/20 for Global Transport Business A 3 4 B Global Transport (~20% of XYL revenue) ~85% of25%revenue driven by of products ~95% ofcustomers revenue driven by 25% of and partners Pricing Product Customer and Strategy Simplification Growth Strategy • Strategic pri
Slide 57: Key Messages
Key Messages Mission-critical solutions in most resilient part of water cycle MSD Strong demand accelerated by scarcity, quality and aging infrastructure Organic* Revenue Above-market growth from unmatched installed base, innovation and synergies CAGR 2024-2027 Margin expansion through portfolio sim
Slide 58: Break
Break Please Return at 12PM EST 58 Investor Day 2024
Slide 59: Applied Water
Applied Water 1 Company Overview and Strategic Update 2 Driving Profitable Growth 3 Segment Presentations 4 Financial Update Franz Cerwinka 5 Q&A and Closing Remarks President, Applied Water and Business Transformation 6 Lunch and Product Demonstrations 59 Investor Day 2024
Slide 60: Key Messages
Key Messages Leading position, superior brand equity and established global channels Innovative solutions reduce customers’ energy and water consumption Cross-selling through industrial channel drives synergy opportunities Simplification drives margin expansion, enables reinvestment for profitable g
Slide 61: Applied Water Snapshot
Applied Water Snapshot 2023 Segment Financial Profile $1.9B Revenue 19.0% Adj. EBITDA* Margin 2023 Pro Forma Revenue Mix ~10% ~35% ~20% ~45% End Market Region ~50% Product Type1 ~55% ~65% ~20% Building Industrial US Emerging Markets Replacement New Build Solutions Rest of the World W Europe 61 Inves
Slide 62: Applied Water Overview
Applied Water Overview Industrial Buildings Moving water from its source to the point of use Energy efficient cooling, heating, and transport across industrial applications, throughout the solutions across building applications, such as manufacturing cycle and the treatment process universities, sch
Slide 63: Applied Water Served Addressable Market
Applied Water Served Addressable Market Served Addressable Market Market Drivers How We Win • Climate change, regulation • Established footprint and long- standing channel partners • Efficiency and optimization ~$25B • Iconic brands • Skilled labor shortage • Reputation for quality and • Increasing
Slide 64: Growth Accelerated by Customer Centric Focus and Innovation
Growth Accelerated by Customer Centric Focus and Innovation Continuous Lower Cost of Revenue Synergies Product Innovation Ownership and Market Expansion • Leading products to meet • Extended product lifetime and • Shared channel access through the customers’ water and energy lower opex combination o
Slide 65: Case Study: Hydrovar X Enabled Pumping at NYC Service Building
Case Study: Hydrovar X Enabled Pumping at NYC Service Building Customer Challenge Integrated Xylem Solutions Aging pumps for a heating distribution Hydrovar X smart motor reduces ~40-50% energy consumption and life-cycle Energy use reduction1 system with footprint limitations costs High energy consu
Slide 66: Case Study: Water Solutions for China Data Center
Case Study: Water Solutions for China Data Center Customer Challenge Integrated Xylem Solutions Requires reliable cooling water supply Prefabricated system including ~$6M Revenue Synergy for performance and up-time treatment, pumping, and sensing Move, treat and measure water efficiently Treatment i
Slide 67: Margin Expansion Drivers Aligned to Customer Value Creation
Margin Expansion Drivers Aligned to Customer Value Creation Simplification Operational Productivity Value Engineering • North America 80/20 • 10% conversion cost decrease • 200 bps product cost reduction deployment kicked off Q4’23 • Industry 4.0 to improve customer • 500 bps increase in product • F
Slide 68: Early Stages of 80/20 Identified Significant Opportunities
Products A B Customers 1 2 Early Stages of 80/20 Identified Significant Opportunities A 3 4 B Applied Water N. America (~10% of XYL revenue) ~90% ofof revenue driven by 25% customers and partners ~35% of products are customized Pricing Product Customer and Strategy Simplification Growth Strategy • I
Slide 69: Key Messages
Key Messages Leading position, superior brand equity and established global channels LSD+ Innovative solutions reduce customers’ energy and water consumption Organic* Revenue Cross-selling through industrial channel drives synergy opportunities CAGR 2024-2027 Simplification drives margin expansion,
Slide 70: Water Solutions and Services
Water Solutions and Services 1 Company Overview and Strategic Update 2 Driving Profitable Growth 3 Segment Presentations 4 Financial Update Rodney Aulick 5 Q&A and Closing Remarks President, Water Solutions and Services 6 Lunch and Product Demonstrations 70 Investor Day 2024
Slide 71: Key Messages
Key Messages Winning with differentiated services and solutions in attractive, diverse markets Outgrowing the market by accelerating synergies with our unified services portfolio Driving durable recurring revenue with outcome-based solutions Accelerating margin expansion with digitally-enabled servi
Slide 72: Water Solutions and Services Snapshot
Water Solutions and Services Snapshot 2023 Segment Financial Profile1 $1.7B Revenue 21.9% Adj. EBITDA* Margin $1.3B Backlog 2 2023 Pro Forma Revenue Mix ~5% ~20% Life Sciences ~30% Energy and ~35% Renewables Solution Region End Market Food and ~60% Beverage ~70% Micro- ~80% electronics Integrated So
Slide 73: Water Solutions and Services Overview
Water Solutions and Services Overview Integrated Solutions and Services Dewatering Assessment Services Engineered treatment systems Engineered pumping solutions for moving Intelligent solutions for assessing and for clean water, process water water and wastewater throughout the cycle optimizing wate
Slide 74: Water Solutions and Services Served Addressable Market
Water Solutions and Services Served Addressable Market Served Addressable Market Market Drivers How We Win • Water scarcity, surplus and • Engineering and service talent, reuse ~3,500 AQUA Pros ~$15B • Water quality and emerging • Comprehensive outcome-based contaminants (e.g. PFAS) services • Tight
Slide 75: Driving Above-Market Growth Through Our Advantaged Platform
Driving Above-Market Growth Through Our Advantaged Platform Lead with Outcome- Grow Wallet Share Expand Services Globally Based Solutions in North America • Guaranteed uptime and reliability • One reliable partner for • Synergy potential: ~75% of market of water systems comprehensive water needs out
Slide 76: Our Outcome-Based Services Address Key Customer Challenges
Our Outcome-Based Services Address Key Customer Challenges Customer Needs WSS Value Proposition WSS Impact Predictability of water Outcome-Based Solutions Margin Accretive Services quality and quantity Application expertise in solutions Higher margin on services; tailored to our customers’ needs cap
Slide 77: Significant Opportunity to Expand Our Service Model Globally
Significant Opportunity to Expand Our Service Model Globally ORGANIC EXPANSION Targeted Expansion Accelerating Scale 2024–2027 2027+ Strategy and Roadmap • Expand within existing customers • Expand to adjacent geographies • Leverage Xylem’s existing service footprint • Roll out outcome-based service
Slide 78: Case Study: Global Expansion with Existing Customers
Case Study: Global Expansion with Existing Customers Customer Opportunity Integrated Xylem Solutions 1 New pharmaceutical plant in Process water capital project with service support to alleviate labor ~$3M Central America Synergy Win challenges and high turnover 2 Wastewater treatment upgrade for tw
Slide 79: Case Study: ISS and Dewatering Integrated Engineered Solutions
Case Study: ISS and Dewatering Integrated Engineered Solutions Customer Opportunity Integrated Xylem Solutions 1 Large energy company: emergency Emergency treatment and transport ~$2M wastewater treatment and pumping across 7 miles – deployed in 24 hours Synergy win 2 Microprocessing customer: missi
Slide 80: Margin Expansion Drivers Aligned to Customer Value Creation
Margin Expansion Drivers Aligned to Customer Value Creation Simplification Strategic Pricing Operational Productivity • Increase fleet utilization • Link pricing to customer value • Increase technician utilization by 10-15% and outcomes with combined workforce • Improve resource allocation as • Leve
Slide 81: Key Messages
Key Messages Winning with differentiated services and solutions in attractive, diverse markets MSD Outgrowing the market by accelerating synergies with our unified services portfolio Organic* Revenue Driving durable recurring revenue with outcome-based solutions CAGR 2024-2027 Accelerating margin ex
Slide 82: Financial Update
Financial Update 1 Company Overview and Strategic Update 2 Driving Profitable Growth 3 Segment Presentations 4 Financial Update Bill Grogan 5 Q&A and Closing Remarks Chief Financial Officer 6 Lunch and Product Demonstrations 82 Investor Day 2024
Slide 83: Key Messages
Key Messages Growing above market with revenue synergies, innovation, and strategic pricing Committed to accelerating margin expansion through simplification Optimizing our portfolio to accelerate shareholder return Delivering top quartile shareholder returns by compounding earnings 83 Investor Day
Slide 84: Reaffirming FY2024 Financial Outlook
Reaffirming FY2024 Financial Outlook FY 2024 Guide FY 2024 Highlights ~$8.5B • Raised guidance after Q1’24 earnings due Revenue • 15% – 16% Total Growth to Q1 outperformance and healthy demand • 4 – 6% Organic* Growth • Evoqua expected to contribute ~$0.8B of inorganic revenue Adjusted ~20% EBITDA*
Slide 85: Accelerating Long-Term Growth With the Evoqua Combination
Accelerating Long-Term Growth With the Evoqua Combination +4-6% Upside from capital deployment 1% (1%) 4–6% ~$10B+ • High-growth • In service of long- industrials term growth • ~3% market • Utility penetration ~$8.5B • ~2% above-market • Global expansion through strategic pricing and innovation 2024
Slide 86: Systematic Margin Expansion From Simplification
Systematic Margin Expansion From Simplification ~100 bps per year 25 – 50 bps Upside from portfolio 50 – 75 bps per year optimization per year ~23% • Simplification benefit • On track for $140M+ ~20% • Low 30% incrementals run-rate cost synergies • Price offsetting • Reinvestment driving material in
Slide 87: Launched 80/20 Across ~40% of the Portfolio
Launched 80/20 Across ~40% of the Portfolio 80/20 Implementation Roadmap % of Revenue Coverage ~40% Businesses already launched: Data Analysis Execution Sustain • Applied Water N. America Q4 2023 and Launch 1–2 Years and Iterate • Smart Metering N. America Q4 2023 ~12 Months Ongoing • Global Transpo
Slide 88: Opportunities to Further Optimize the Portfolio
Opportunities to Further Optimize the Portfolio… Strategic Filter + Financial Filter • Minimal exposure to fastest-growing Dilutive to: parts of the water sector • Long-term growth • Non-core part of broader solution • EBITDA margin • Limited portfolio leverage • Return on invested capital • Ease of
Slide 89: Long-Term Framework Delivers Mid-Teens EPS Growth
Long-Term Framework Delivers Mid-Teens EPS Growth M&A and Share ~40% Buy-Backs Incremental Margins Enabled by Low 30% Simplification Incremental Margins High-Single- 4 – 6% Low-Teens Mid-Teens Digits Base Organic* Growth Avg. Annual Avg. Annual Avg. Annual Adj. EPS* Growth Adj. EPS* Growth Adj. EPS*
Slide 90: Compound Earnings with Disciplined Capital Allocation
Compound Earnings with Disciplined Capital Allocation Capital Allocation Framework Strong Financial Position Organic Investments Support our core business ~$5B Incremental Capacity Inorganic Investments ~$10B Consistent M&A to drive shareholder value of capital deployment ~$3B capacity Dividends FCF
Slide 91: Robust M&A Framework and Pipeline Aligned to Megatrends
Robust M&A Framework and Pipeline Aligned to Megatrends • Intelligent solutions Water Sector Focused on high-growth • Services Growth Areas areas within water sector • Advanced treatment Aligned with Xylem • Strong synergy potential Strategic portfolio and strategic • Asset-light M&A Pipeline Criter
Slide 92: Confident in Significant Shareholder Value Creation
Confident in Significant Shareholder Value Creation 2021-20251 2024-2027 On track to achieve key New financial framework 20211 Investor Day milestones Organic* Revenue Growth 4 – 6% 4 – 6% Avg. Annual Adj. EBITDA* Margin 50 – 75 bps ~100 bps Expansion Well-positioned Adj. EPS* Growth N/A ~Mid-teens
Slide 93: Key Messages Top-Quartile Total Shareholder Returns
Key Messages Growing above market with revenue synergies, Above-Market Growth innovation, and strategic pricing + Margin Acceleration from Simplification Committed to accelerating margin expansion through simplification + Disciplined Capital Allocation Optimizing our portfolio to accelerate sharehol
Slide 94: Break
Break Please return at 1PM EST 94 Investor Day 2024
Slide 95: Q&A and Closing Remarks
Q&A and Closing Remarks 1 Company Overview and Strategic Update 2 Driving Profitable Growth 3 Segment Presentations 4 Financial Update Matthew Pine 5 Q&A and Closing Remarks President and Chief Executive Officer 6 Lunch and Product Demonstrations 95 Investor Day 2024
Slide 96: Q&A Investor Day 2024
xs 08 O 96 Investor Day 2024 xylem
Slide 97: Closing Remarks
Closing Remarks Platform, culture and team to empower transition to a water-secure world Drive economic Drive resilient above-market growth, accelerated by Evoqua synergies value creation, while enhancing Committed to accelerate margin expansion sustainability through simplification leadership Compo
Slide 98: Appendix
Appendix 98 Investor Day 2024
Slide 99: Xylem Inc. Non-GAAP Measures
Xylem Inc. Non-GAAP Measures Management reviews key performance indicators including revenue, gross margins, segment operating income and margins, orders growth, working capital and backlog, among others. In addition, we consider certain non-GAAP (or "adjusted") measures to be useful to management a
Slide 100: Appendix: Xylem Inc. Non-GAAP Reconciliation
Appendix: Xylem Inc. Non-GAAP Reconciliation EBITDA and Adjusted EBITDA ($ Millions) 2023 2021 2017 2012 Net Income 609 427 330 297 Net Income margin 8.3% 8.2% 7.0% 7.8% Depreciation 193 118 109 94 Amortization 243 127 125 48 Interest Expense (Income), net 21 69 79 51 Income Tax Expense 26 84 136 91
Slide 101: Appendix: Xylem Inc. Non-GAAP Reconciliation by Segment
Appendix: Xylem Inc. Non-GAAP Reconciliation by Segment EBITDA and Adjusted EBITDA for FY 2023 ($ Millions) 2023 MCS WI AW WSS Operating Income 133 275 310 132 Operating Margin 8.3% 12.4% 16.7% 7.8% (Loss)/Gain from sale of business (1) - Depreciation 27 34 25 105 Amortization 97 55 3 79 Other non-o